Market Valuation of Residential Property€¦ · seek specialist advice to certify the structural...

Market Valuation of Residential Property Property: 53 Smith Road, Kumeu, Auckland

Type: Market Valuation

Type of Property: Lifestyle with Subdivision Potential

Effective Date: 24 May 2019, being the date of inspection

Prepared For: Helen Mitchell

Client: Helen Mitchell

Reference: J-190136

Prepared By: Davies Batley Limited

Valuation Summary

___________________________________________________

This Valuation Summary is part of the full valuation report and must be read in conjunction with the full report,

as follows.

Address 53 Smith Road, Kumeu, Auckland

Instructed By Brian Mitchell

Date of Inspection 24 May 2019

Prepared for Helen Mitchell

Purpose of Valuation Assessment of market value.

Date of Valuation 24 May 2019

Brief Description The property comprises a 6.4042 hectare rear lot off the intersection of Farrand

Road Waitakere Road. The property’s legal address however is Smith Road

which is in effect a private access strip. The land has a near level to gently sloping

contour and is predominantly in pasture. Erected on the site is a two level main

residence that was originally constructed in the 1920s and subsequently extended

in the 1970s, a separate minor dwelling, garaging and a large implement shed.

The land has subdivision potential which would appear to necessitate the removal

of the main residence to provide the required access with.

Critical Assumptions Nil.

Significant Risks Nil.

Property Reference J-190136

__________________________________________________________________________________

Market Value $2,650,000 (Two Million Six Hundred and Fifty Thousand Dollars)

Unless otherwise stated, all figures are GST inclusive (if any)

__________________________________________________________________________________

As the registered Valuer, we confirm that a personal inspection of the property has been undertaken.

Prepared By Davies Batley Valuers Ltd

John Batley

Registered Valuer, MPINZ, ANZIV

Email: [email protected]

mailto:[email protected]

Table of Contents

Valuation Summary ........................................................................................................................................... 2

1.0 Introduction ................................................................................................................................................ 4

2.0 Legal Title .................................................................................................................................................. 6

3.0 Resource Management ............................................................................................................................. 7

4.0 Statutory Valuation and Charges .............................................................................................................. 7

5.0 Location ..................................................................................................................................................... 9

6.0 Site Description and Services ................................................................................................................. 10

7.0 Improvements .......................................................................................................................................... 11

8.0 Market Commentary ................................................................................................................................ 14

9.0 Risk Assessment ..................................................................................................................................... 15

10.0 Valuation Rationale ................................................................................................................................. 16

11.0 Valuation.................................................................................................................................................. 21

12.0 Conditions of Valuation............................................................................................................................ 22

Appendix A

Record of Title ………………………………………………………………………………………………..23

Appendix B

Valuation Policy, Critical Assumptions, Conditions and Limitations ................................................... 26

53 Smith Road, Kumeu, Auckland J-190136 4

This report, in its entirety, is addressed to:

Helen Mitchell

1.0 Introduction Instructions

This valuation has been prepared on specific instructions received from Brian Mitchell to assess the Market

Value.

Our Client

This report is confidential to the parties to which it is addressed, for the specific purpose stated. No

responsibility is accepted and or extended to any third parties. We invite other parties who may come into

possession of this report to seek our written consent to them relying on this report. We reserve the right to

withhold our consent or to review the contents of this report in the event that our consent is sought.

Furthermore, neither the whole of the report or any part of it or any reference to it, may be published in any

document, or in any communication in terms of any third party without prior written approval by Davies Batley

Valuers Limited in regard to the form and context in which it will appear.

We can confirm that the following parties may rely on this report.

• Helen Mitchell

The Valuer

This report has been prepared in accordance with the current Australia and New Zealand Property Institute's

Valuation Standards and the instructing parties’ valuation brief, and we confirm that the prime signatory:

• Is authorised, under the Valuers Act 1948 to practise as a Valuer;

• Holds a current Annual Practicing Certificate;

• Is qualified to carry out a valuation of the subject property;

• Is independent of the instructing party and report recipient;

• provides an objective and unbiased opinion of the property's value and has no material connection or

pecuniary interest with the property, client or instructing party that could conflict or reasonably be

regarded as being capable of affecting a proper valuation of the property.

• Has complied with the professional education requirements and has experience in the location and

category of property being valued;

• Has made a personal inspection of the property.

Purpose of the Valuation

Market Value

Asset Valued

53 Smith Road, Kumeu, Auckland


Basis of Valuation

Market Value

Market Value is defined in International Valuation Standards 2017 as:

The estimated amount for which an asset or liability should exchange on the valuation date between a willing

buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties have

each acted knowledgeably, prudently and without compulsion.

Valuation and Inspection Dates

Valuation Date: 24 May 2019

Inspection Date: 24 May 2019

Extent of Investigation

Please refer to Appendix B Valuation Policy, Critical Assumptions, Conditions and Limitations of this report.

We confirm the inspecting Valuer

• Has carried out an inspection of exposed and readily accessible areas of the improvements. We advise

that the Valuer is not a building construction or structural expert and readers are recommended to

seek specialist advice to certify the structural soundness of the improvements.

• Has prepared this report for valuation purposes only and we confirm it is not a geotechnical or

environmental survey. Should any defect be found, including structural defects, this information may

impact on the value of the property.

• Has not conducted a land survey of the subject property and assumes all improvements lie within the

title boundaries and are compliant with all relevant building regulations and bylaws.

• Has not been provided with an environmental audit of the property and is not aware of any potential

environmental concerns. Our valuation and report assume that the land and buildings are unaffected

by harmful contaminants or noxious materials which may impact on value.

• Has made no allowances in our valuation for any expenses of realisation, or to reflect the balance of

any outstanding mortgages either in respect of capital or interest accrued thereon.

• Has not sighted a current land information memorandum for the subject property during the course of

this valuation. Our report is subject to there being no outstanding requisitions or adverse information

affecting the property.

Nature and Source of Information Relied Upon

The information reviewed or previously provided includes, but is not limited to, the following:

• Certificate of Title particulars as memorialised by Land Information New Zealand;

• Resource Management classifications and controls as stated within the District Plan of the relevant

Territorial Local Authority;

Furthermore, we confirm:

• The statements of fact presented in the report are correct to the best of the Valuers knowledge;

• No information or documentation of particular significance to the valuation has been relied upon

without specific verification by the Valuer.

• The analyses and conclusions are limited only by the assumptions and conditions which follow within

this report;

• The professional fee charged in relation to this assignment has not been contingent upon any aspect

of this report;

• The valuation has been performed in accordance with PINZ/NZIV Codes of Ethics and Conduct.


Assumptions and Special Assumptions

For standard valuation assumptions refer to 'Extent of Investigations' above and Appendix B Valuation Policy,

Critical Assumptions, Conditions and Limitations.

Valuation Standards

Our valuation has been prepared in accordance with International Valuation Standards 2018 and Australia and

New Zealand Valuation Guidance Notes including:

+ IVS Framework Fundamentals

+ IVS 101 Scope of Work

+ IVS 102 Implementation

+ IVC 103 Reporting

+ IVS 230 Real Property Interests

+ IVC 310 Valuation of Real Property Interests for Secured Lending

+ ANZVGN 1 Valuation Procedures - Real Property

+ ANZRPGN 1 Disclaimer Clauses and Qualification Statements

+ ANZRPGN 4 Methods of Measurement

+ Residential Valuation Standing Instructions Version 1.3

2.0 Legal Title

Identifier: NA24A/506

Land Registration District: North Auckland

Estate (Tenure): Fee Simple

Area: 6.4042 hectares more or less

Legal Description: Lot 5 on Deposited Plan 64528

Proprietors: Helen Irene Mitchell

Interests: • Appurtenant hereto is a drainage right created by

Conveyance 245721 (R.260.58)

• Subject to a right of way over part coloured yellow and to

drainage rights over parts coloured blue and yellow on

DP64528 specified in Easement Certificate 273894.1

• Appurtenant hereto are drainage rights specified in

Easement Certificate 273894.1

Comments We believe the Title search remains free from any registrations or

encumbrances that would have a detrimental effect on the property's

overall value or negotiability.

Refer: 'Appendix A’ - Copy of Record of Title


3.0 Resource Management

Territorial Authority: Auckland Council

Plan Status: Operative, in part

Zone: Countryside Living

Zone Description: This zone provides for rural lifestyle living in identified areas of rural

land which are generally closer to urban Auckland or rural and coastal

towns. There is a diversity of topography, land quality and landscape

character within the zone which results in a diversity of site sizes.

The zone is the receiver area for transferable rural site subdivision

from other zones.

This zone incorporates a range of lifestyle developments,

characterized as low-density residential development on rural land.

These rural lifestyle sites include scattered rural residential sites,

farmlets and horticultural sites, residential bush sites and

papakainga.

Some parts of the zone reflect historical subdivision patterns, while

other areas were established on rural land that did not have

significant rural production values, and was often associated with

steep topography and poor soils. Bush lots enabled the protection of

indigenous vegetation cover as part of the subdivision process.

We understand that the land could possibly be subdivided into three

lots or alternatively a higher density if transferable titles are

purchased.

Comments: On 15 November 2016, the Proposed Auckland Unitary Plan became

'Operative in part' under:

• Section 160 of Local Government (Auckland Transitional

Provisions) Act 2010 (LGATPA) and

• Clause 20 of Schedule 1 of the Resource Management Act

1991 (RMA).

This however excludes, but is not restricted to:

• Appeals that remain subject to Environment Court and High

Court appeals under the LGATPA.

It is interpreted that the subject property conforms as a permitted

activity.

4.0 Statutory Valuation and Charges

Rating Valuation

Rating Valuation as at 1 July 2017

Land Value: $1,700,000

Improvements Value: $375,000

Capital Value: $2,075,000


The Rateable Value is a mass appraisal valuation exercise which is undertaken utilizing computer indexed

figures, based on sales statistics. Individual properties are not inspected on a regular basis and changes in

the improvements may not be recorded. The rateable value excludes chattels and does not take into account

any market movement which may have occurred since the date of valuation.

This is a statutory assessment conducted in order to provide a basis to assist territorial authorities to collect

revenue through rates and does not necessarily represent fair market value at any given time.

Rates Payable

As at the date of this valuation, the Territorial Authority reports the rates payable for the subject property to be

$3,923.28 inclusive of GST.


5.0 Location

(Source: Google Maps)

Smith Road extends west from the Farrand Road intersection with Waitakere Road in Kumeu. Waitakere Road

is the main arterial route in the locality and connects back through to the Kumeu township which is

approximately 1.5 kilometres drive. Waitakere Road continues south through Taupaki and on through to

Waitakere and Swanson.

The local primary school is on Station Road in Huapai approximately 1.5 kilometres drive with secondary

schooling provided in Helensville to the north and back through to Hobsonville or Massey in the west. A wide

range of commercial facilities is available in Kumeu.

Surrounding development includes lifestyle properties generally from one hectare to five hectares together with

larger land holdings including some economic farm units. The quality of improvements varies although

generally includes some very good to superior quality homes on medium sized lifestyle holdings. Waitakere

Road is a sealed carriageway with electricity and telecommunications reticulated through the locality whilst

water supply is by roof catchment and storage on site. Sewerage disposal is generally via natural means,

sceptic tank or similar. Smith Road is a private accessway and is formed in loose metal.


6.0 Site Description and Services

(Source: Auckland Council GeoMaps)

Area: 6.4042 hectares (more or less)

The shape and configuration of the site is indicated on the Title documentation. Access to the property is from

the intersection of Farrand Road and Waitakere Road where a 10 metre wide access strip extends for

approximately 600 metres to the main portion of the site. The accessway connects at the north eastern corner

of the site with the site proper almost rectangular in shape having a width of approximately 90 metres and a

depth of approximately 300 metres.

The larger residence is located in a recess to the side of the access strip where is adjoins the main portion

of the site with the other improvements also located close by along the northern boundary.


7.0 Improvements

Overview – Main Dwelling

We understand the main residence was constructed in the 1920s and subsequently extended through the

1970s. We have completed an external inspection of this dwelling only and we are informed that it is in

fair/average condition internally. The dwelling is built over two levels and comprises approximately 214 square

metres in floor area in addition to an open garage and concrete terrace. Due to the subdivision potential of the

site this dwelling would need to be removed to ensure clear access through to the main portion of the site. The

dwelling therefore has some added value as a holding income.

Overview – Minor Dwelling

The minor dwelling is quite separate from the main residence and was constructed in the late 1980s. It originally

provided two bedroom accommodation however it has been remodelled to provide for one bedroom only.


Construction

Foundations: Timber piles

Flooring: Particle board

Exterior Cladding: Fibre cement weatherboards

Window Joinery: Aluminium

Roofing: Coloursteel in a tile pattern

Internal Wall Linings: Plasterboard

Ceiling Linings: Pinex tiles

Floor Areas

The approximate floor areas are as follows:

Dwelling: 54.1 square metres

Deck: 5.3 square metres


Layout and Amenities

Brief details of fixtures, fittings, and accommodation as provided as noted during the inspection are as follows:

Room Includes

Entry From the timber deck via a ranchslider into the living room.

Living Areas A combined lounge/dining room is generally orientated to the north,

includes a heat pump and a woodburner.

Kitchen Features laminate benchtops, a stainless steel sink inset, a four element

electric stove, a pantry and adequate cupboard space that has a wood

grain type finish.

Bedroom One double bedroom, includes a built in wardrobe.

Bathroom Originally the second bedroom, includes a built-in bath, a shower cubicle,

a vanity unit and a linen cupboard. A separate wc adjoins.

Laundry A separate room includes a supertub.

Condition & Presentation

The exterior of the dwelling is generally of good appearance with no obvious signs of disrepair. Internally the

dwelling is tidy and well-presented having a combination of paint and wallpaper wall finishes together with vinyl

flooring throughout.

Other Improvements

Adjoining the minor dwelling is a single garage that is fully lined and decorated. Between the main residence

and minor dwelling there is a four bay garage and a large implement shed. The workshop area comprises

approximately 203 square metres together with two levels of “offices” of approximately 52 square metres and

a mezzanine floor of approximately 10 square metres. The building is constructed of corrugated coloursteel

with good access to the warehouse portion with two roller shutter doors.

Site Development

Smith Road is a shared private roadway having a loose metal carriageway approximately 3.5 metres in width.

The loose metal carriageway continues onto the site proper providing access to the dwellings, garaging and

implement shed. There are older shade houses close to the implement shed and there are three concrete

water tanks providing the water supply together with a bore. The site is subdivided into six paddocks with post

and wire fencing and there are some shelter belts surrounding an orchard area. Surrounding the improvements

are near level laws together with various shrubs, trees and garden areas.

Our valuation has been prepared on the basis of the improvements being located within the site boundaries

and constructed strictly in accordance with the recommended practices, and free from any defect; unless

otherwise stated within this report.


8.0 Market Commentary Auckland house prices flattened through 2018 after continuously reaching historically high levels. Major bank

economists however are generally in agreement that Auckland house prices are unlikely to fall dramatically,

and the expectation is that they will eventually creep higher.

A future sharp slowdown would be of concern as this would challenge financial stability given the large

exposure, in excess of 55% of mortgage lending, of the banking system to the Auckland housing market.

Government measures to slow the rapid rise in the Auckland housing market initially took effect from September

2016, requiring a minimum of 40% deposit from residential property investors which has been subsequently

reduced to 30%. The restriction of no more than 10% lending to owner occupiers across New Zealand with an

LVR (Loan to Value Ratio) of greater than 80% has also been more recently adjusted to 20%. Loans to

construct new housing are exempt.

Sales volumes have slowed particularly in Auckland and market activity has remained more subdued following

on from the general election. The Labour Government has instigated various plans to cool the housing market,

these include increasing the housing supply, reducing net migration, banning foreign buyers from purchasing

existing homes, reducing tax advantages of housing investment and increasing the bright-line test from two

years to five years.

Offsetting the above is the Official Cash Rate and mortgage interest rates remaining at historically low levels,

the expectation that Auckland City's population will continue to intensify, a shortage of land and a shortage of

construction staff and some construction materials.

The following graphs illustrate both sales volumes and average selling prices in the Auckland market over

recent years.

More recently New Zealand’s property market is now showing all the signs of being a two-tier market with

Auckland price growth slowing but strong regional growth continuing. Nationwide, value growth continues to

ease back due to lower demand in the housing market caused by LVR (Loan to Value Ratio) restrictions and

tougher lending criteria from the banks.


9.0 Risk Assessment This Risk Analysis reflects the current impact on the subject property of a number of specific factors. Eight

factors are considered, four property specific aspects and four market related aspects. Each individual Risk

Rating is determined by considering a factor (such as Location or the Local Economy) and the effect that may

have on the subject property’s value and marketability. Lower Risk Ratings are an indication of a property that

should perform well in the market place. However, a higher Risk Rating may indicate a property that, in

comparison with other similar properties, may be inferior in terms of value stability and marketability.

The Risk Assessment herein forms part of the full valuation report.

Factor Risk Comments

Property Risk Rating* Low Med High

Location/Neighbourhood Stable residential area

Land (incl. planning & title) Freehold Tenure

Environmental Issues Nothing at all to suggest there may be

environmental issues

Improvements Older dwelling and minor dwelling with normal

wear and tear

Market Risk Rating* Low Med High

Recent Market Direction The Auckland market has experienced significant

increases in property values in recent times.

There is some argument that this is making many

homes unaffordable however with the supply of

land coming to the market still being limited, this

positive market may well continue, however, there

are also indications that the market may cool over

the coming months.

Refer to Section 8.0 ‘Market Commentary”

Market Volatility Due to the recent escalation in prices, the amount

paid for individual properties does show a level of

volatility

Local Economy Impact Local economy is broad based and stable

Market Segment Conditions Standard property with comparable sales within

the last six months and normally expected selling

period of up to three months

Risk Ratings are a subjective indicator only and should not be relied upon in isolation when purchasing or

lending.

➢ Recent Market Direction

The Auckland market has experienced significant increases in property values in recent times. There is some

argument that this is making many homes unaffordable however with the supply of land coming to the market

still being limited, this positive market may well continue.

➢ Market Volatility

Due to the recent escalation in prices, the amount paid for individual properties does show a level of volatility.


10.0 Valuation Rationale Introduction

In determining the Market Value of the subject property, we have considered the following recognised valuation

methodologies:

➢ Sales Comparison Market Approach

➢ Net Rate Approach

Sales Comparison Market Approach

The sales comparison market approach, considered the most reliable method, involves comparison of the most

recently sold similar properties within the locality of the subject property. A range of factors is taken into account

including differences in position, views, land contour, size, construction, condition and utility of all

improvements, overall presentation and saleability, market movement and circumstances of the sale. In

addition, vacant land sales, current construction costs, and physical and economic depreciation factors are

also considered.

Net Rate Approach

Under the net rate approach, the sales are analysed to a residual value for the dwelling after deducting the

value of the land, other improvements, and chattels. The net rate is then expressed as a rate per square metre

of the dwelling floor area.

Hypothetical Subdivision Approach

In assessing the block value of subdivisible land Valuers generally adopt, as a primary method, the hypothetical

subdivision budget or development valuation which addresses the potential of the property and indicates the

anticipated market value of the individual sites to arrive at a gross realisation. From this figure are deducted

notional costs which can include payment of GST, selling costs, legal fees, agents’ commission and a profit

margin to arrive at a net realisation for the development.

From the net realisation deductions are made for hard costs which include development costs such as

earthworks, roading construction, sewerage and water reticulation, utilities, landscaping, retaining walls, power

reticulation, telephone and gas, development contribution, stormwater contribution, wastewater, network

growth contribution, reserve contribution, Council charges, planning costs, consultants, engineers etc. There

is on occasion some reimbursement for additional land given as reserves to the Council.

Further expenses are deducted which include interest on money outlaid over the development period, generally

at half rate to allow for money in/money out on the gradual sell down of the sites. The last cost is the

miscellaneous amount for marketing rates etc. After full deductions are made for these items, where

appropriate, the indicated block value/market value is arrived at.

Potential Gross Realisation

After considering the sales evidence available it is our opinion that the sites would achieve prices totalling

$5,000,000. This figure is before costs are deducted and include GST.

Sell down Expenses/Profit Margin

The selling costs and agents commission would also be deducted on a lump sum basis and the cost would

possibly be close to 2.50% overall. The estimated legal costs for selling each site has been estimated at $1,500

per site.


In terms of profit margin, the larger the subdivision and the more complicated the subdivision, it requires a

higher allowance for profit and risk. On a five lot subdivision, it would be realistic to consider a profit margin of

around 15% on money outlaid.

Development Costs

We have had the benefit of cost estimates from a number of proposed subdivisions, the costings include a

driveway, Resource consent fees/levies; LINZ fees; Engineering and Surveying; power / phone; as well as

legal fees associated with the issuing of titles as opposed to the legal costs associated with the sale of the lots

/ sections. These costs generally total approximately $120-$150,000 per site.

Interest on Money Outlaid

It is our opinion that the development from today until the completion would take circa 12 months as

Resource Consent has been approved; therefore, on the basis of a money in/money out basis we have

calculated the interest rate at the commercial rate of 6%; which is higher than first mortgage funding at

present, but development funding does attract a premium. The estimated construction period is 12 months

which often includes gaining Resource Consent and during which time we would anticipate that a number

of sites could be presold.

Miscellaneous Costs

In terms of the scale of the subdivision we have allowed a contingency on development costs and fees which

reflects the uncertainty of cost estimates.

The net rates analysed from the sales evidence are then compared to the dwelling to determine an appropriate

net rate value for the subject dwelling. The value of the land, other improvements and chattels are added to

provide an indicated Market Value.

In assessing the value of the subject property, we have considered a number of sales within the precinct which

have occurred in recent times. Sales of particular relevance include (but are not limited to) the following:

82 Burns Lane

Date Sold January 2019

Sale Price $1,325,000

Comments The property comprises a 4.83 hectare site zoned countryside

living. Erected on the site is an early 1900s villa together with a

two bedroom minor dwelling, stables and a workshop. The

property has high tension power lines passing nearby and a

stream traverses the site.

Comparison A potentially subdivisible site under the countryside living zone

however the property is disadvantaged by the high tension

power lines and stream.


28 Farrand Road

Date Sold July 2018


Comments Comprises a two level 1960s dwelling of approximately 180sqm

situated on a 1.7836 hectare site. The land is predominantly in

pasture.

Comparison A superior dwelling although significantly smaller site,

considered inferior.

89 Hanham Road

Date Sold December 2018


Comments Comprises a two level Lockwood dwelling of approximately

160sqm together with a barn/stables, double garage/sleepout, a

swimming pool and 9 paddocks on a 4.0471 hectare site. The

property benefits from views back to Auckland City.

Comparison Better improvements although lesser underlying land value,


150 Taupaki Road

Date Sold October 2018


Comments A 1990s Colonial style dwelling of approximately 300sqm

together with a 5-bay implement shed, stables and a workshop,

situated on a recently subdivided site of approximately 1.3

hectares. The land is predominantly in pasture and includes a

swimming pool, a tennis court and an established vineyard.

Comparison Lesser land content although greater improvement value, overall


28 Pomona Road

Date Sold November 2018


Comments Comprises a 2.0 hectare rear lot that is in part pasture, part bush

and includes a large pond. Improvements include a 260sqm

early 1900s villa that has been renovated to a high standard

together with a separate garage/loft.

Comparison Lesser land content although greater improvement value,



214 Pomona Road

Date Sold September 2018


Comments A 1980s brick and tile roof dwelling of approximately 172sqm

plus decks and verandas, a minor dwelling of 108sqm with

separate road frontage, a large workshop, a heated swimming

pool and 1.2677 hectares of land that is in 3 paddocks.

Comparison Similar home and income type layout, although lesser underlying

land value, considered inferior.

321 Amreins Road, Taupaki

Date Sold February 2019


Comments Comprises a relocated villa described as requiring renovation

situated on a 6.5808 hectare site with wide road frontages. It

has resource consent for subdivision into three lots. The land is

zoned countryside living.

Comparison A similar size site with subdivision consent approved, considered

superior.

311 Annandale Road, Taupaki

Date Sold June 2018


Comments Comprises a large single level dwelling originally constructed in

2005 and subsequently extended in 2012 to provide for 467sqm

of floor area, that includes a three bedroom main residence with

two car garaging and a two bedroom self-contained wing with a

single garage. There is also a separate stand-alone studio

situated on a 1.5518 hectare site.

Comparison Lesser underlying land value although greater improvement

value, overall inferior.

95 Pomona Road

Date Sold February 2019

Sale Price Approx. $2,600,000

Comments Comprises a 1980s five bedroom 275sqm dwelling with

extensive deck surrounds, includes stables, a barn, a sleepout

and studio, situated on a 2.51 hectare site. Also includes a

floodlit tennis court together with a spa and changing rooms.

Comparison Lesser land content although superior improvements, overall

considered reasonably comparable although the exact sale price

is confidential.


262 Amreins Road, Taupaki

Date Sold June 2018


Comments Comprises a 5.32 hectare site zoned countryside living where

resource consent has been granted for a two lot subdivision.

Erected on the site is a 1970s dwelling of approximately 155sqm

together with a large workshop, minor dwelling and stables.

Comparison A smaller land holding although subdivision consent approved

and includes added value in the improvements. Considered

superior.

200 Tawa Road, Taupaki

Date Sold September 2018


Comments Comprises a 5.6494 hectare site zoned countryside living.

Erected on the site is a basic two bedroom dwelling plus a

sleepout. Approximately half of the site is in pasture and half in

bush with a stream running through it.

Comparison This is a smaller land holding with little added value in the

improvements. This property is considered inferior to the subject

however the price appears particularly high.

Valuation Reconciliation

The sales stated indicate a value range between $1,325,000 and $3,200,000 and we conclude that the subject

property sits within the above range stated. The property has potential for subdivision ‘as is’ or a higher density

subdivision through the transferable title system. A number of the sales above have a similar zoning to the

subject and we note that the two Amreins Road sales already include resource consent for subdivision. The

majority of sales indicate a tighter range of value between say $2,300,000 to $2,800,000 with the Tawa Road

property significantly higher but appearing out of line with the majority of the sales.

On balance, bearing in mind the physical attributes of the property including its age, size, condition and

prevailing market conditions we believe the subject property has a value today in the vicinity of $2,650,000.


11.0 Valuation

Valuation Assessment

We assess the Market Value of the subject property to be $2,650,000 (Two Million, Six Hundred and Fifty

Thousand Dollars).

Hypothetical Subdivision Approach

Five sites at @ $1,000,000 5,000,000

Less cost of selling: Legal fees 5 sites @ $1,500 $7,500

Sales commission 2.5% $125,000 $132,500

Net realisation $4,867,500

Less Profit & Risk, 15% of outlay Say $650,000

$4,217,5000

Less cost of subdivision:

- Civil costs including a fees, 5 sites @ $120,000 $600,000

- Transferable titles 4 @ $200,000 $800,000

- Holding costs, 6% on outlay for half development period $125,000

- Legal cost of purchase $10,000

- Contingency $50,000

$1,585,000

Indicated Value $2,632,500

Our assessment can be apportioned as follows.

Land value 6.4042 hectares $2,400,000

Improvements

Main residence $120,000

Minor dwelling $60,000

Implement shed $50,000

Other Improvements, site development, garages, water tanks,

sceptic etc

$60,000

Total Improvements $290,000

Indicated Market Value, Excluding Chattels $2,690,000

Chattels – added value $10,000

Indicated Market Value $2,700,000

Unless otherwise stated, all figures are inclusive of GST (if any).

As a check we have considered the likely value if the property was to be subdivided into three lots as of right.

A rough rule of thumb is generally the full value of one site at say $1,300,000 plus half the value of two additional

lots, that is, two sites at $1,300,000 each at half value $1,300,000 which gives a total of $2,600,000.


Correlation

All three methods are generally supportive and we believe the property has a value today in the vicinity of

$2,650,000 (Two Million Six Hundred and Fifty Thousand Dollars).

There is some uncertainty in the real estate market at the present time with properties taking longer to sell and

vendors having to adjust their expectations to meet the market. Under these circumstances we believe a 5%

margin or error to be appropriate.

Having regard to the current market conditions we believe the subject property would sell within a three month

period assuming a reasonable asking price.

12.0 Conditions of Valuation

Nil.

Please contact the writer should you wish to discuss any matters raised in this report.

Davies Batley Valuers Limited

John Batley

Registered Valuer, MPINZ, ANZIV

Email: [email protected]

mailto:[email protected]

Appendix A

Record of Title

Appendix B

Valuation Policy, Critical Assumptions, Conditions and Limitations

Purpose This valuation report has been completed for the specific purpose stated. No responsibility is accepted in the event that this report is used for any other purpose. Responsibility to Third Party Our responsibility in connection with this valuation is limited to the client to whom the report is addressed and to that client only. We disclaim all responsibility and will accept no liability to any other party without first obtaining the written consent of Davies Batley Valuers Limited and the author of the report. Davies Batley Valuers Limited reserves the right to alter, amend, explain or limit any further information given to any other party. Date of Valuation Unless otherwise stated, the effective date of the valuation is the date of the inspection of the property. This valuation is current as at the date of valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period (including as a result of general market movements or factors specific to the particular property). We do not accept liability for losses arising from such subsequent changes in value. Without limiting the generality of the above comment, we do not assume any responsibility or accept any liability where this valuation is relied upon after the expiration of 90 days from the date of the valuation, or such earlier date if you become aware of any factors that have any effect on the valuation. Market Valuations Market valuations are carried out in accordance with the Valuation Standards and Guidance Notes. Market Value is defined “The estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties have each acted knowledgeably, prudently and without compulsion”. No allowances are made in our valuations for any expenses of realisation, or to reflect the balance of any outstanding mortgages either in respect of capital or interest accrued thereon. Mortgage Recommendation The Australia and New Zealand Valuation and Property Standards require that, unless specifically requested by a lender, the valuation report should make no specific recommendation as to the suitability of the property as a security or the maximum loan as an amount or percentage of value. The valuation report has however included comment on commonly known, readily ascertainable and/or reasonably foreseeable property-specific and market factors as are relevant to the market value and marketability, to assist in informing the lender. We note that the valuation provided in this report is our opinion of the market value as at the valuation date, on a willing buyer/willing seller basis, and does not allow for the potential consequences and costs of a forced sale. The value may change in the future because of market conditions and changes to the state of the subject property. Legislation We have not obtained a Land Information Memorandum (LIM) or Property Information Memorandum (PIM) for this property which, unless otherwise stated, is assumed to conform to all requirements of the Resource Management Act 1991, the New Zealand Building Code contained in the First Schedule to the Building Regulations 1992, the Building Act 2004 and any Historic Places Trust registration. Our valuation reports are prepared on the basis that properties comply with all relevant legislation and regulations and that there is no adverse or beneficial information recorded on the Territorial Local Authority (TLA) property file unless otherwise stated. Legislation that may be of importance in this regard includes the Health & Safety in Employment Act 1992, the Fire Safety and Evacuation of Buildings Regulation 1992, and the Disabled Persons Community Welfare Act 1975. Assumptions This report contains assumptions believed to be fair and reasonable at the date of valuation. In the event that assumptions are made, based on information relied upon which is later proven to be incorrect, or known by the recipient to be incorrect at the date of reporting, Davies Batley Valuers Limited reserves the right to reconsider the report, and if necessary, reassess values. Reliability of Data The data and statistical information contained herein was gathered for valuation purposes from reliable, commonly utilised industry sources. Whilst we have endeavoured to ensure that the data and information are correct, in many cases, we cannot specifically verify the information at the source and therefore cannot guarantee its accuracy. GST When analysing the sales and/or leasing evidence relied upon for this valuation, it is noted that we have attempted to ascertain whether or not the sale price/rental is inclusive or exclusive of Goods and Services Tax (GST). The national property database of sales evidence does not always identify whether or not the sale price is inclusive or exclusive of GST. Where we have not been able to verify the matter of GST, we have assumed that the national property database record of the sale price is inclusive of GST (if any) for residential properties and plus GST (if any) for non-residential properties. Should this not be the case for any particular sale or rental used as evidence, we reserve the right to reconsider our valuation. Cross-Lease Title Unless otherwise stated, the property has been valued on the basis that the title is not defective and that all required consents have been given to buildings and structures erected on the land. This includes all consents required from the balance of other cross-lease owners to any alterations or additions to leased structures. We advise that our valuation is based on a physical inspection of the property and we have not searched Council records to verify whether there are any additions since the date of the lease.

Registrations Unless otherwise stated, our valuation is subject to there being no detrimental or beneficial registrations affecting the value of the property other than those appearing on the title. Such registrations may include Waahi Tapu and Historic Places Trust registrations. Risk Analysis The Risk Analysis is a simplified analysis based on the current experience and knowledge of the Valuer and is not a technical analysis. Those relying on the valuation cannot expect that the Valuer brings to the task any greater level of common knowledge or ability to foresee events that can be expected of persons experienced in the market for that class of property in its marketplace (which may be local or broader). The risk analysis is the product of the current experience of the Valuer based on information that is common knowledge and/or readily ascertainable in the market for that class of property in its market place. The risk analysis does not reflect information that is privileged or to which the market for that class of property in its marketplace does not have ready access and it does not reflect decisions, announcements, releases, articles and the like that the Valuer has not had reasonable time and opportunity to assess and consider, or would in the ordinary course of acting as a Valuer become aware of or have access to. Subject to these limitations, the risk analysis indicates the level of adverse impact each stated aspect has on the subject property’s value and marketability as at the date of valuation. Land Survey We have made no survey of the subject property and assume no responsibility in connection with these matters. Unless otherwise stated, the valuation has been assessed conditional upon all improvements being within the title boundaries. Unless otherwise stated, we have not undertaken investigations or been supplied with geotechnical reports with respect to the nature of the underlying land. Unless otherwise stated, the valuation has been assessed conditional upon the land being firm and suitable ground for the existing and/or potential development, without the need for additional and expensive foundation and retaining work or drainage systems. Contamination We have not undertaken an environmental audit of the property. Unless otherwise stated, our valuation and report are conditional upon the land and buildings being unaffected by harmful contaminants or noxious materials which may impact on value. Verification that the property is free from contamination and has not been affected by noxious materials should be obtained from a suitably qualified environmental expert. Not a Structural Survey Our inspection has been undertaken for valuation purposes only and does not constitute a structural survey. Verification that the building is sound should be obtained from a suitably qualified building engineer. If the building is found to be unsound, this finding/new information is likely to impact on the value of the property. Earthquake-Prone Buildings We are aware that a number of buildings are or may be potentially affected by local territorial authority policies for 'earthquake-prone' buildings (Earthquake-Prone Building Policies) required to be in place under the Building Act 2004. The Earthquake-Prone Building Policies may require building owners to undertake engineering investigations and subsequent structural upgrading, demolition or other steps to meet the requirements of the Earthquake-Prone Building Policies. Unless otherwise stated, our valuation makes no allowance for any costs of investigation, upgrading, demolition or other steps which may be incurred by the building owner to meet the requirements of Earthquake Prone Building Policies. We are not qualified to determine the 'earthquake-prone' status of the buildings. Our valuation is therefore subject to a review, investigation, and assessment of seismic performance of the building, by a suitably qualified building engineer, to determine the 'earthquake-prone' status of the building and where required, an estimate of any costs for structural upgrading, demolition or other steps required for the building to meet the requirements of Earthquake-Prone Building Policies. If the building is found to be 'earthquake-prone', this finding is likely to impact on the value of the property, and our valuation may materially alter as a result. Systems Our valuation has been assessed conditional upon all hot and cold water systems, electric systems, ventilating systems and other devices, fittings, installations or conveniences, including lifts and escalators where appropriate, as are in the building, being in proper working order and functioning for the purposes for which they were designed. Water Leaks & Penetration Effects We are aware that a number of buildings have developed problems associated with water leaks, water penetration, weather-proofing, moisture and water exit control systems, mould, fungi, mildew, rot, decay, gradual deterioration, microorganisms, bacteria, protozoa or like forms. Problems can result from defects in design, construction methods, and materials used, or any combination of defects. Our valuation has been assessed conditional upon all buildings and structures being constructed strictly in accordance with recommended practices and free from defect unless otherwise stated. We are not qualified to undertake, nor have we undertaken, a structural survey of the buildings or structures. We accept no liability for any defects that may arise as a result of poor building design, construction methods or building materials. If you have any concerns, you should engage a suitably qualified person to report on this matter. Defects revealed by a suitably qualified expert may affect the value of the property. Restrictions on use/publication Neither the whole nor any part of this valuation and report or any reference to it may be included in any published document, circular or statement without first obtaining our written approval of the form and context in which it may appear. Our report is only valid when bearing the Valuers’ original signature. Professional Indemnity Cover We certify that Davies Batley Valuers Limited holds current professional negligence insurance at the time of supplying the above valuation.

Date post:	09-Oct-2020
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